$286,500 in 1999 compounded at 3% gives us $396,600 in 2010. It is asking $569k. $170k or so to drop for the next two years.

Roll up metal garage door - that doesn’t shut all the way.

Purchase Price: $745,000

That’s what happens during a frenzy. This is a 400k condo at most.

30 years old and $337 per month in dues, I like the 1999 price better.

My rent on my large 2bedroom in west hollywood is $1450 a month.  Why would I ever take on a huge mortgage payment for this house plus almost $400 in dues?  And that’s *before* the special assessments that are coming.

CDOs do not buy individual residential mortgages.  They buy a tranche of the MBS that owns a portion of the loan.

joe schmoe mortgage -> securitized into MBS -> CDO Purchases tranche of MBS -> Qualified institutional investors buy tranche of CDO -> FGIC/MBIA/etc insure tranche and collection premiums.

joe schmoe stops paying - mbs doesn’t get its interest/prin for that loan - cdo doesn’t get its full int/prin payment - investors of cdo tranche don’t get their full payment - insurance company has to pay out…game over.

I know people in Irvine who bought their homes in 2005 and 2006 and are 200K or more underwater. I give them another 6 to 12 months before they realize that walking away is the only sane option.

From Patrick.net:

http://news.bbc.co.uk/2/hi/business/7529277.stm?ref=patrick.net

“If we see any leveling off of the foreclosure numbers, it will be the calm before the Option ARM storm due to hit over the next two years.”

I think we are seeing a little of this right now, at least in Irvine.  NODs for July for Irvine are down under 4 per business day.  I think June was the first month under 5 per business day in quite some time…

I still find it amazing that Irvine inventory continues to trend in spite of the REO flood in recent months.  Sales continue to be considerably down vs. historical averages and yet months inventory appears to holding around six or so months.  When that months inventory moves up, hopefully beginning in the Fall, I think prices will resume their retreat.

Uh, that would be trend down…  Sorry.

Remember this one is “inside the loop”, thats worth at least a $100,000. Isn’t it?

“SEPERATE RETREAT”

What does that look like?

I want a retreat in my master bedroom.  Hopefully it’s soundproof so I can retreat there when the wife starts yelling.

The must sell inventory, NODs & NOTs are actually inflating prices.

It seems counterintuitive, however, the must sell inventory isn’t must sell.  It’s can’t sell.

Most distressed inventory is listed with WTF pricing.  The reality of the situation is that the market inventory for can sell and will sell is very small.

The future inventory of can sell and will sell is huge.  It’s just not here yet.

Probably a closet with a toilet in it.

The key line in the BBC report was that the voluntary walk-away “is the best financial decision for the family.”  Unfortunately, it is true.  The best decision for a seriously underwater family is to stick the loss to the lender and go on saving for retirement, college,  etc.

Voluntary walk-aways are gaining steam as the stigma of doing so disappears.  As more people realize it is the smart move, the banks will get what they deserve for fueling the bubble.  Thus, they will hopefully restrict mortgages to only what is truly affordable and drive prices down to where a financially responsible family can afford a home without bankrupting their future.

In short, the voluntary walk-away forces lenders to be more responsible and will reward responsible families with affordable prices.

There are some nice places inside the loop and there are some nice places outside the loop. Unfortunately, this condo and its complex isn’t one of them.

I agree that it is rational to walk away, but why now, why not wait until your Option Arm explodes?  In this case they got the Option Arm in June 2007 and since these loans, as I understand, typically had 2 year window before they payments exploded.  So - assuming your Option Arm payment is less than rent and I assume they can make the Option Arm payments - why not stick around until the Option Arm explodes, then default (and get however many months in the house after you default and before you are evicted).  Your credit gets equally dinged if you walk away now or later, and arguably a hit later is better than a hit today. 

I’m not saying this is the right thing to do, but if ‘you are where you are’ in this market, it would be rational to see if you are better off staying until the last possible minute.  As such I think there are a lot of houses to come into the market in the next year as the 2006/07 vintage Option ARM’s start to explode.

In Huston, new home is less than $100/square foot.  We are in a good place, I would say $200/sqt at most. So this condo is at most 400K.

Does anybody have any suggestions for determining reasonable prices to pay for houses now?  What if I see a house that goes up for sale at a reasonable price?  Assuming the economy doesn’t go into a crazy depression or something, how would I determine if a price is decent.

By decent, I guess I would say something that will probably not decrease in value much in the next 2 years, and will likely be valued for the same or more in 5 years.

Families bought in a panic as they ‘thought’ buying was smart.  Never having been truly able to afford the house, they’ll walk.  But when?  I think in the spring of 2009 it really starts and continues through 2009.  After a traditional price drop during the winter… its simply not going to be worth holding on any longer to a financial boat anchor. 

Got Popcorn?
Neil

Stop me if this has been answered before—but in the holy City of Irvine, what exactly does one get for one’s $300-$400 “condominium fees”?

That raises an interesting question: IS there such a thing as a “decent price” in a bubble burst?

Here’s the thing: let’s say you buy a house at its 2001 price. You think you got a good deal; nice neighborhood, good loan, and cheaper than all your neighbors.
Only problem is that your cheap purchase price probably helped lower the comps in your neighborhood…pretty soon, your house will be “average” for the area. Which, of course, puts some of your new neighbors underwater. Some default, and can’t get what YOU paid anymore because buyers and lenders are very cautious and, like you, want a “deal.” So, they end up lowering the price to sell it, cheaper than what you paid!

Now, all this is kind of a “perfect storm” prediction. Your purchase wouldn’t be the only comp; your neighbors might be able to weather a decrease in their prices; your neighbors might be able to keep their asking price high until they get it; and the assumption that you could get the same loan in 2 years that you could get now is a VERY dicey one.

So, I think the question could also be asked: is there such a thing as a reasonable price right now?

What about Bush’s bailout?  What’s that going to look like?

“What about Bush’s bailout?  What’s that going to look like?”

Socialization of the losses will create MASSIVE inflation here in the US. In their feeble attempt to supoort housing prices, will cause the price of everything else to SKYROCKET !! (food, energy, health insurance…etc)

The eldery, and fixed income people will be the first group to be TOTALLY WIPED OUT. Next will be the middle class…

Peter Schiff says that interest rates arent going to the moon, they are going to PLUTO !
And I concur. When that happens, the bond market is going to IMPLODE (buh bye Pimco), and hyperinflation will be here at last!

Live with it.
We created this mess by voting for and keeping these jerks in the office.
Eight years of an inept administration.
And we are still so foolish, still walking with our tails ( :-\ ) in between our legs.
A service based economy…
A culture based on paper wealth…
A society of no moral value, no responsibility, no accountability,..., starting at the very top and down to the HELOC abusers.
This bill proves it.
We deserve it.
This marks the end of a (used to be) great country.

IrvineRenter,

  Do you think you could provide some insights on the housing bill that Bush just signed into law today?

-Dan

I anxiously await the next depression, because it WIPES OUT all the stupidty (fraud, corruption, heloc abusers…etc) thats been built up in the system.

Change is a comming all right… But not for the benefit of the sheep in the US.

Why do you see massive inflation?  It seems to me that recessions/depressions have always caused deflation/massive deflation.  Right now while the world is ‘relatively’ ok inflation can occur, but doesn’t the law of supply and demand eventually catch up with everything, even oil, ag products, raw materials, you-name-it?  Everything except precious metals which tend to zoom during hard times.  But even gold going to $5,000/oz isn’t inflationary since you don’t need to own it or anything associated with it (jewelry) if you don’t care to. 

I’m no economist but it just seems to me a contracting economy can’t cause inflation.  Feel free to set me straight on this.  Cheers.

“Why do you see massive inflation?”

Because where do you think the money is going to come from when they socialize all these losses?
(ie. all these bailouts)

Ans: They will print it, and kill the US dollar in the process. IMO.

Also, when I say “depression” Im not talking about the depression like what happened during the 1930s, Im talking about a HYPER-INFLATIONARY DEPRESSION. Where the costs of things that are required to live (food, energy, health insurance..etc), are going to go through the roof, while things you dont really need like tvs, SUVs, McMansions…etc will actually FALL in value.

In other areas of the country, where people did not buy so many houses during the last couple of years of the bubble (and, hopefully, did not HELOC the hell out of their places), most neighborhoods are filled with people who aren’t looking to sell. Therefore the foreclosures are a minority, a sliver really, of the inventory, and a good deal can probably still be had.

Our average price for a home here is about 275,000, with lots of stuff at the lower end of the market. There’s a REO on an acre (a three bedroom and two and a half bath colonial) that’s going for 120,000; a contractor was working on the property for four days straight when it went into REO from lis penden, so I don’t know how much of a trashout it was. This REO has been on the market for four months now, and I’ve seen equivalent houses selling with list prices of 250-300,000.

This is a long anecdote that, I hope, indicates that such a perfect storm is most likely to happen in areas where there are lots of refis and new homes. More established areas with less transitory movement, like here, are probably good places to find good investments, but my problem is I don’t know what a good price is anymore.

This site was the one that introduced me to the phrase knifecatcher—a term I introduced a realtor to just last week—and I don’t know that my bid for a property wouldn’t be grabbing for the blade instead of the handle. Even in areas where the bubble never inflated that much, the real estate market is in huge turmoil. It has more to do with gas prices, inflation, lack of credit, and too many homes in the inventory. Foreclosures are not that big an issue here in the mid-atlantic, but they sure help complicate things…..

I decided to wait instead of investing money in real estate. I’m waiting another year and would rather pay a little more than get caught in a bad investment.

I couldn’t help but noticing that home prices look like an unstable feedback system.  Prices when rising are supported by the rise, when falling the fall accelerates all factors that cause the drop, until the price drops well below what might be expected.
So when to buy?  What is a good price?
The only safe time to buy would be when prices are rising, and a good price must be below seasoned sales of similar properties.  Anything else is a gamble; perhaps sometimes you must gamble?  Then cost of ownership at historically normal interest rates had better be less than the cost of renting.

You took the words out of my mouth.

What have we become when we let tens of thousands of completely defenseless, mentally damaged COMBAT VETERENS and others who are suffering serious mental illness, live on the streets while we put hundreds of billions of dollars under criminal financial firms and irresponsible, greedy borrowers.

I’m meeting the potential beneficiaries of this bill, and I already know the people who will pay for it, and the people who are suffering through no fault of their own but will receive no help from it.

Let me tell you that the foreclosure “victims” who will benefit are not just exactly living on the streets by the Wilson el stop and digging for food in garbage dumpsters. Quite the contrary. They’ve been getting to live large in houses they never had any damn business buying to begin with, and will now get to keep.

The money spent on this bailout could have been spent to assist all the vets from Nam and the Gulf war I am always being panhandled by as I walk the streets of Chicago. I wish I could help them all, but I’d be out my entire month’s paycheck in four blocks if I gave a buck each to just one tenth the deserving needy I see congregating by the social service agencies in the neighborhood my office is in.

There will be no help for people who lost houses in Detroit and Cleveland that they owned for 20 years and struggled to buy honestly, because they didn’t borrow over their heads- they just lost their jobs and couldn’t replace them. This will be happening to many more honest people in many more cities as the recession resulting from 10 years of malfeasance and lunacy deepens.

There’ll be very little help for those of us still renting who lose jobs, and there will be millions such people. They will NOT get bailed out on their rent.

And with that thought, even though the whole f———business makes me choke with rage, I will put my Bitter Renter anger behind me and work really hard on attaining a state of mind and emotional balance that will enable me to do the work necessary to ensure my own survival in these times, which is by no means assured.

I think that the decision for owning a house isn’t entirely a financial one.

If I can own a similar house for equal or less than I am paying in rent, I’d like to do it.  I just don’t want to end up tens of thousands underwater in a year or two and end up wanting to move for some reason and having to eat so much money.

I want to buy a house because I hate the uncertainty of renting.  Not knowing if my rent will go up at the end of the lease.  Not knowing if my owner will sell the house and kick me out next year.

If I owned my current house I’d want new carpet, and want to make other modifications.  But I’m sure my landlord won’t pay for it, and I don’t want to if I’m only going to be here 1 or 2 more years.  If I was going to keep renting this house for 5 more years, I might be willing to pay for these mods.

These are the frustrations I face as a renter.

I just want my house to be a place I like, and be able to make it a place that I like if it’s not.  I don’t need to make a profit by owning a house, however I would love it if I was able to have a paid-for house by the time I am ready to retire.

AMEN!
Why are our elected leaders helping the undeserving, the irresponsible, the greedy, immoral bankers?
Why are they ignoring the deserving?
How can they have a restful sleep at night while millions of deserving citizens suffer?

We let them, by staying silent!

Agreed.  However, there is an argument you need to consider to default sooner rather than later.  The further away the foreclosure is, the less impactful to your FICO score.

e.g. The median Irvine household earning near $100K could walk away today from the option ARM that won’t adjust til late next year and get the foreclosure on their credit within 6 months (maybe).  They can rent something less than 20% of their income and start saving like mad.  Pay down any other debt improving their financial statement. 

Then, by mid-2010 when prices are likely lower, the foreclosure will be 2+ years behind them, and their FICO will have improved.  They’ll be in a better position to consider buying a home at a reasonable price.

In the newer developments, you get property insurance for the structure, maintenance of common garden areas, maintenance of a common pool area/clubhouse, etc.

Nice. I hope you enjoy bartering with veggies to purchase other goods and taking shifts with your spouse at night guarding the doors/windows with your trusty shotgun by your side.  But at least you’ll feel good that others were “wiped out.”

There’s little room for your reasoned thoughtful response in the comments today Blueberry Pie. 

Thankfully, for people like you, the tide has finally turned dramatically and the house you want will be available at a reasonable price you can afford very shortly.

Not a United States “Great Depression”, but a Weimar-era Germany “Depression” where a wheelbarrow full of banknotes still wouldn’t buy you a loaf of bread, and the best possible use of the currency was to burn it for warmth.

Best investments?

Shotgun
Shotgun shells
Tent
Blankets
Cartons of cigarettes
Cases of beer

I, too, would like the emotional benefits that come from owning a home. That’s worth something to me.

What’s keeping me off the market these days, though, is the anticipated emotional cost of watching it continue to go down, and being nervous that the economy would turn me or the wife out of our jobs. (Same things that are keeping many others from buying today) Once I’m more certain that my job is a lock (and that I’m staying in the area) and that a mortgage payment isn’t “monthly equity burn”, I’ll be on the market.

Check this drop for the so called “desirable” and “bubble proof” area.

http://www.redfin.com/CA/Newport-Beach/1814-Irvine-Ave-92660/home/3560920

Bush’s Bailout? Wasn’t this written by the Democratic Congress and, until very recently, opposed by the administration?

I think that everything that happens bad with the country can acceptably be blamed on Bush for the next 5 to 10 years.

I need to read through the details to have a more nuanced opinion, but there is very little the government can do to stop the crash of housing prices. The bailout is mostly an attempt to keep our banking system solvent. By allowing a few marginal borrowers to keep making excessive payments, they will keep money flowing in to the banks and stopping the losses from bankrupting the entire system. This may save a few homedebtors from foreclosure, but it is not of benefit to them in the long term. Fewer foreclosures may slow the rate of price decline, but it will not impact where we find the bottom. Affordability is what it is, and until houses are affordable again, prices will continue to fall.

Thank you, IR.

This sounds like nit-picking to me.

I’m in the walkaway camp as well if I were depressed homeowner, though the misses would never do such basic on her morals. My strategy for walkaway would be two fold
1. Build up cash by not paying mortgage until I’m booted as after this housing debacle cash will be king anyway and in 6-9 months of mortgage free living I’d have a good down payment for my next move. Also I don’t think there’s any way that the ‘damaged credit’ will be as severe as most think since so many more moderate risk borrowers will be joining the subprime scores after the foreclosures hit everyone.
2. I’d plan my eviction around the weather as I doubt any lazy person from bank is going to try to evict me in the rain and want 2 people showing up at trustee sale in November-February. They also wouldn’t want the house on their books for 2 months before that mythical spring rush of home buyers. Therefore I would plan on stopping mortgage payments beginning in May, ride out 6 months without paying, know bank won’t move me in first 3 months of my default and maybe make a small teaser payment in February to keep it rolling until summer beach rentals open.
I know I’m crazy but why not plan your eviction better than a Vegas vacation ?

Good point I hadn’t thought of. However I think there is some uncertainty on what mortgage financing will be for less than stellar FICO’s in a couple years. In your case my Fico is X in 2010 but X-something if I wait until the Option Arm blows up (I have no idea what “X” is).  I guess I’d error on the side of having more money in the bank (less than $100k in any one bank, of course) in any scenario even if it means it is a bit tighter on the mortgage market. My view would be if my credit doesn’t get me a mortgage in 2010, it means alot of people like me also can’t get loans, so hard to see alot of price appreciation while I wait another year to get better FICO & having money in bank for downpayment gives me edge.  I think your case works better if my credit is basically OK outside the walk away, but if my credit is already a mess then the impact on FICO matters less since the walk away is on a low score anyway.

The 3Bs: Booze, Bullets, Bullion.

if this:
http://www.redfin.com/CA/LOS-ANGELES/5201-BALTIMORE-St-90042/home/7082636

can ask for $259/sqft… then I doubt Irvine will drop below $259/sqft.

Here’s a solution to our debt problem (to foreign nations). Sell Southern California to the Chinese. Sell Northern Californa to the Japanese. Sell Central California to the Oil Producers. Done. No more debts and immigration (at the California borders anyway) becomes a Chinese problem. Can we add this to the next election ballot?

Peter Schiff is online now with his radio show every Wed evening at 5pm PST.

http://www.europac.net/radioshow.asp

He’s talking about this bailout of Fannie and Freddie, and the moral hazard, and blow back its going to cause.

This is one of the best radio shows Ive ever heard.

Hmm.. that location ain’t that bad.

I could blow my house out and move into that one…. the only issue is the school system and the planes from John Wayne… although I think that by there they have moved south onto the bay.

I’d rather we sell North Dakota and Minnesotta to the Canadians, Texas to the Mexicans, Mass. and New Hampshire to the Irish and Florida to Cuba.

Keep California in California soil.

“Best investments?”

Just get OUT OF US DOLLARS !!!!!
Buy gold, silver, foreign currencies,
foreign bonds…etc

Like I said, the SAVERS (Mostly elderly people)
and fixed income people will the the FIRST
to get WIPED OUT !

Ah, just wait until the next bill nationalizes mortgage lending and everyone can get their 30-year directly from the Treasury.  They can keep mortgage rates nice and low and prop up prices for even longer!

Instead of throwing puches at me,
you should probably be worried about
yourself.

I got a shotgun, rifle, and 4 wheel drive…
So I will survive.

. .

The west park II condo roll back to 2003 price

This condo has 4 different owners since year 2003
Do you think 2008 owner is a knife catcher or bottom fisher ?

502 Marinella Aisle, Irvine, CA 92606-8834
2 Bedrooms

Sales History Sales Price
4/29/2008 $399,000
7/22/2005 $515,000
4/7/2004 $460,000
9/25/2003 $397,000

http://www.cyberhomes.com/propertydetails.aspx?propid=61294088&AspxAutoDetectCookieSupport=1

I’m a lurker who has noticed that many of the socal homes have stucco exteriors. How does the stucco hold up? I heard that there are a lot of problems with the stucco failing due to water intrusion and leaks.

The picture of the courtyard with the garbage cans is great.  I would be very interested in purchasing any home where they were afraid to post interior photos….

There is more benefits to selling California because:

1) We’re about to sink into the ocean anyway. It’s just a matter of time.

2) We owe the most money to those foreigners.

3) We will finally be drilling for oil on the California…err..I mean Saudi Arabia-West coast. No worries about environmentalist.

4) The Chinese will adopt a harsher anti-drug policy against drug smugglers coming in from TJ.

5) Make all those I HATE AMERICA Hollywood types happy…because they won’t be living in America anymore.

6) California has a budget issue that is worst than those other state mentioned.

7) We’ll still retain some influences over the new owners (think: Colorado River).

8) Arizona will solve their housing problems (think: Californian refugees).

9) Since I’ll probably be living in Arizona, I can drive across the border and get myself some authentic Chinese food..not this Panda Express crap.

10) We can incorporate Puerto Rico as a state so that we don’t have to change our flags (Think: 50 starts)

11) And most important, since we’re selling off the most important state (ok, one of) in the Union, that will teach the people in the remaining states a very important lesson that will last for centuries.

Ipoplaya said “I still find it amazing that Irvine inventory continues to trend in spite of the REO flood in recent months.”

Back during the Savings and Loan crisis most of the REO’s never hit the public resale market.  They were packaged in lots of 10, 50, 100 or more and sold to investment groups, funds and individuals.  One group, out of London, that I was aware of bought 150 homes in one package in Texas and then rented them all out on lease with options for the tenants to buy.  By buying a package of properties they were able to buy them at a huge discount to the then market price.  I didn’t have the money to invest with them back then, but I’ve spoken to one of the partners of that group, and they are preparing to do the same thing again now.  They don’t care if property prices are going to continue to fall because they expect to be able to buy groups of properties at 30 to 50% discount below current market levels.  They will then rent them out and give the tenants an option to buy at the current market levels which will represent significant profit to the investors.

There was an interesting article today about the same thing happening with investors buying mortgages at a discount. http://www.msnbc.msn.com/id/25939227/

“Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar.”

Break out the bandages, it’s gonna’ be ugly.  They should have rented in Santa Clara or Santa Rosa for ~1900.00 per month (2 bed/2 bath) and road out the storm.

“But at least you’ll feel good that others were “wiped out.”

BTW, I take no joy in watching people get WIPED OUT finacinally.

But for those that dont hedge themselves fincially, is what I call collateral damage.

If that happens because of finacial stupidity, then so be it.

Im protececting myself, and my family. And I intend to survive, and prosper, and NOT become financialy fodder for the US gobberminet.

Fuck ‘em. Protect YOURSELF because no one else can or will.

“I got a shotgun, rifle, and 4 wheel drive…

Hey, isnt that a line from Hank Williams Jr’s song:
Country Boy Can Survive ?

http://www.youtube.com/watch?v=_DDgDAbLHgo

All the 4 wheel drives, shotguns, and ammo won’t do you much good if the economy really collapses, and the trucks stop supplying your local grocery store with food. 

If things really get as bad as some here are predicting, Irvine/Orange County/LA is the last place anyone will want to be.  You’ll want to live somewhere you can raise your own vegetables, hunt for game, and the marauding gangs are at least a few hundred miles away.

I know few people who have first and second homes, all under water and they have stopped making payments. They say that they got $0 down homes and are not going to keep paying their high mortgege when they can now rent much cheaper elsewhere. So, they will live there for free until eviction time comes. The upside down $$ and their mortgage requires them to have double their income in order to keep living there.

There are several like these folks out there. Its just a matter of time. I am sure NOD activity is picking up

Good lord!  Amazing that they didn’t spend a few bucks and a couple hours covering up all the graffiti with some white spray paint before taking those photos.

That is because not a single one of them has a conscience. Certainly not the man at the top and his sidekick, Evil Dick. He hasn’t been held responsible for a thing in his life nor has he successfully guided a single thing without breaking it.

Why should any of this have been a surprise to anyone?  All the evidence one ever needed has always been there. We simply ignored it as a collective populace. We allowed a vocal few to shout down the reasonable amongst us and let a treacherous and treasonous king-maker turn our elections into votes on gay marriage and “flip-flopping” rather than what really mattered. Worse yet we did it twice.

Sad to say but we deserve our fate.  Maybe someday soon the good people of this country will give a damn again and pay attention, educate themselves on what’s really going on and do something about it.  I miss my country and I want it back.

Of course the other possibility would be that we all get immediate 100% raises from our respective employers because the guys at top in “officer country” will suddenly grow a conscience and feel altruistic and share the wealth.

Oh who am I kidding?! They’ll just use their cash to build thicker walls and taller barbed wire around their estates to keep us rampaging villagers from raiding the coffers.  But hey it was a nice thought right?

wow! its amazing.

Chicago is only down 11%—what’s the matter with you people over there? We are down 25% already. You people better get on the stick!

First the oil companies, now the banks. I am going to do what I can to not give either of these two any money.

Not too bad actually, but it does crack in earthquakes .  It usually has waterproof sheating underneath. Contains concrete, which is waterproof.

I hope we don’t find out what will happen should tens of millions of credit card debtors make the same “rational” decision.

But maybe they won’t, because cc debt is distinctly NOT non-recourse. The issuers can come after you and garnish your paycheck- unless you can bankrupt and get totally cleared.

One thing is becoming clear, and that is that the more restrictive bankruptcy laws of the past few years have become worthless. How, in all justice, can homedebtors be allowed to walk away from hundreds of thousands of dollars of home debt that they voluntarily agreed to pay, while forcing underwater CC debtors to pay at least some portion of their debt?

Maybe it’s time to make mortgages full recourse, like any other debt. Were it not for the non-recourse laws, far fewer people would have assumed these mortgages to begin with, and there certainly would have been fewer speculators who have no assets buying 20,30 units of a condo tower at a pop.

“You know you’re a redneck when,....”

What have we become when we let tens of thousands of completely defenseless, mentally damaged COMBAT VETERENS and others who are suffering serious mental illness, live on the streets while we put hundreds of billions of dollars under criminal financial firms and irresponsible, greedy borrowers.

BUUUUUUUSSSSSSSHHHHHHHHH!H!!!!!1!!!1!!!

Or, you know, 1980’s ACLU-type lefties who actually won a bunch of lawsuits that now prevent states from forcing uncooperative mentally ill folks to accept treatment.  That would be where those “thousands of vets” came from.  Twenty years ago.

Either way, I understand you were simply making rhetoric and the accuracy of what you’re saying is unimportant to you.

Those homedebtors are able to walk away because the banks got mortgages on primary residences excluded from cramdowns in most bankruptcy proceedings.  In CA, purchase money loans are nonrecourse, unless the lender wants to try to prove fraud on the part of the borrower. 

It seems to me that bankruptcy court really is the right place for these issues to be worked out.  It would certainly reduce walkaways of people who have nice cars, etc.  In CA, they could even walkaway from their primary residence and move to a second home or vacation home that they might still own.

Bankruptcy court is also a great place to take creditors who don’t return phonecalls, make illegal demands and untrue claims, etc.

One woman put it quite eloquently: “Is the bank going to fund my retirement because I was a good girl and paid my mortgage?”

In 2007, we were hearing about people who were purchasing a second home, not for a vacation home, but because they were “downsizing” and wanted to get their second home in shape before they walked away from their first mortgage.  They had already made the decision to walk away from the underwater mortgage, so they searched for their next, less expensive home before their FICO scores imploded.

So what do they tell the mortgage company (or the FBI when it’s investigating fraud), they say that they always planned to sell their first home but just could find a buyer.

I wonder if the Bankruptcy laws will be changed because of this fiasco.  In fact, I wonder if they don’t change the debt reporting laws to make bad debt show up much longer than 7 years.